Loss of TGF-beta growth factor-induced cell cycle arrest is a hallmark in cancers. Our long-term objective of this application is to understand the fundamental processes controlling cell cycle progression and cell differentiation in normal cells and to elucidate the functions of dysregulated TGF-beta signal transduction as a causal factor in tumor pathogenesis. One of the most critical events in activation of TGF-beta signal transduction pathway is the phosphorylation of transcription factor SMADs by cell surface TGF-beta receptors. While phosphorylated SMADs directly activate the gene responses in the nucleus, hypothetical protein phosphatases are anticipated to dephosphorylate phospho-SMADs and consequently shut down TGF-beta signaling. Despite supporting data for the existence of SMAD phosphatases (SMP), the identity of SMPC(s) remains vague. Therefore, our short-term strategy for this proposal is to identify such phosphatases and investigate the regulation of SMADs by (de)phosphorylation. Our preliminary studies have identified a phosphatase designated SMP1 that can interact with and dephosphorylate SMAD2. These data lead us to hypothesize that SMP1 acts as a bonafide phosphatase for tumor suppressor SMAD2 and shuts down TGF-beta signaling. Thus, it is significantly important to investigate the physiological roles of SMP1 in the regulation of tumor suppressing functions of TGF-beta signaling. We propose three specific aims to test the hypothesis. Aim 1: The molecular mechanisms for SMP1-mediated SMAD2 dephosphorylation will be investigated by further characterizing the phosphatase activity of SMP1, examining the SMP1-SMAD2 complex interaction and determining the structural features required for SMP1- mediated SMAD2 dephosphorylation. Aim 2: We will determine the physiological roles of SMP1 in TGF-beta responses such as TGF-beta-induced cell cycle arrest in mammalian cells and tissue differentiation during Xenopus development. Aim 3: We will examine the regulation of SMP1-mediated SMAD2 dephosphorylation in breast cells and cancers. The experimental design to carry out the proposed research will take on a wide range of approaches that cross the multiple disciplines of biology to address fundamental questions in normal cell functions and cancer development. It is expected that the results obtained from this project will help to establish a working theory for how SMAD2 is regulated and provide insights into the mechanisms of TGF-beta resistance and of SMAD actions in malignant transformation and progression of human cancers. Lay description: We propose a research plan to understand how TGF-beta and related growth factors regulate cell functions in normal versus cancer cells. The results will be pertinent towards development for a foundation for the rational design of novel therapeutic approaches for prevention and treatment of human cancers and other diseases.